China and Australia's worsening relations would cost Australia its AU$1.3 billion wine exports. (pic: file image)
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Australian wine exports drained by China

Australian wine exports to China from January to June plunged to just AU$13 million, down from AU$419 million of the same period last year, as other market gains struggle to offset loss in its most valuable export market.

Australian wine exports to China from January to June plunged to just AU$13 million, down from AU$419 million of the same period last year, as other market gains struggle to offset loss in its most valuable export market.

With the deflation from China, its biggest export market, Australia’s overall wine exports in the last 12 months ended in June dropped by 10% to AU$2.56 billion year on year, while export volume declined by 5% to 695 million litres (77 million 9-litre case equivalents), according to Wine Australia’s latest Export Report released today.

Explaining on the drop, Wine Australia General Manager Corporate Affairs and Regulation, Rachel Triggs, said the key factors were the downturn in exports to mainland China following the imposition of tariffs and the cumulative effects of three consecutive lower vintages in 2018, 2019 and 2020, which meant there was less wine available to export.

China and Australia are locked in trade rows (pic: stock image)
China and Australia are locked in trade rows (pic: istock image)

Exports to the UK were at their highest level in a decade, with the value of exports increasing by 23% to AU$472 million and volume by 16% to 269 million, making the UK the biggest destination for exports by volume and the second by value.

Despite the increase in UK and other top markets, the void left by China is too big to fill, the wine trade org admitted.

“Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined AU$240 million, but they did not offset the decline in exports to mainland China” Triggs said.

Exports to mainland China as the trade organization says were mainly driven by bottles wines, while the shipment to the UK consist of mostly bulk.

“However, excluding mainland China, exports increased by 12% in value to AU$1.96 billion and increased by 6 % in volume to 643 million litres,” she added.

China for now still ranks as Australia’s biggest export market by value, with AU$ 606 million imported during the period, which is down by 45%. The value is nearly less than half of what China used to import at AU$1.1 billion.

China first announced the anti-dumping investigation last August, then imposed a preliminary tariff of 212% last November, which was eventually formalized at 218% for a period of five years.

Impacts of the tariffs will worsen as the 218% anti-dumping tariff the Chinese government slapped only took effect in March this year.

Australia's wine exports in the past 12 months ended in June (pic: Wine Australia)
Australia’s wine exports in the past 12 months ended in June (pic: Wine Australia)

THE UK

Among Australia’s top export markets, UK performed well. The growth in exports to the UK was much stronger in the first half of the year, due to the surge in wine sales in the off-trade sector spurred by the COVD-19 related shut-down of the on-trade as well as some exporters sending wine into the market ahead of Brexit.

Exports to the UK increased by 40% to AU$255 million in the first half of the financial year and by 8% to AU$218 million in the second half. While growth in the second half was at a much lower rate, the growth in Quarter 4 (up 10 per cent) was stronger than Quarter 3 (up 6 per cent).

Hong Kong

Exports to Hong Kong saw remarkable three-digit growth. Australian wine exports to the city jumped by 111% during the last 12 months to AU$187.

As we have just reported, Hong Kong’s extraordinary growth reflects partly the local market’s fast recovery but as many speculated a strategy for wineries to ship wines to Hong Kong in the hope of eventually ferrying the wines to the mainland.

USA

Exports to the US declined 7% in value to AU$400 million and by 8% in volume to
127 million litres (14 million 9-litre case equivalents).

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